At what point of the production phase of an extractive operation should inventories be recognised?
A) Inventories may be brought to account at the earliest stage at which their value and quantity may be reliably measured or estimated.
B) Inventories should be brought to account at the earliest stage at which materials representing, or expected to be converted by further processing to, saleable product can be measured with reliability and the quantities of such materials can be determined by physical measurement or reliable estimate.
C) Inventories should be brought to account at the point that their recovery from the ground is considered to be virtually certain and the extent of the reserves can be measured reliably.
D) Inventories should be brought to account only at the latest stage at which materials representing saleable product can be measured with reliability in terms of their recoverable value and cost.
E) None of the given answers.

Question

Quizplus · Accepted Answer

According to IAS 2 Inventories, inventories should be recognized at the earliest stage at which materials representing, or expected to be converted by further processing to, saleable product can be measured with reliability and the quantities of such materials can be determined by physical measurement or reliable estimate. So, option B is the best choice. Option A is not specific to extractive operations. Option C is too late in the production phase. Option D is not in line with IAS 2.

At What Point of the Production Phase of an Extractive